Skip to main content

Economic Growth Vs Economic Development

Economic Growth

Economic Growth is defined as the long term increase in per capita income of people of a nation. Hence, it is an increase in a country's real level of national output because of an increase in the quantity of resources, increase in the quality of resources, improvements in technology etc. which increases the value of goods and services produced by every sector of the economy. In a nutshell, the increase in productivity of an economy is called as an Economic Growth. Economic Growth is measured by an increase in a country's GDP (Gross Domestic Product) and a country's GDP is the total monetary value of the goods and services produced by that country over a specific period of time.
Economic Development
Economic development is defined as the long term increase in living standard of people of a nation. Hence, it is a normative concept i.e. it applies in the context of people's sense of morality (right and wrong, good and bad). Development is a broader concept which also includes the creation of more opportunities in the sectors of education, healthcare, employment and the conservation of the environment, freedom of expression etc.Development looks at a wider range of statistics than just GDP per capita. Development is concerned with how people are actually affected. It looks at their actual living standards.
Various economists have defined economic development in various ways.Economic Development comprises an increase in living standards, improvement in self-esteem needs and freedom from oppression as well as a greater choice (Michael Todaro). Generally, it refers to the economic wellbeing of a nation. Economic development is the process whereby the real per capita income of a country increases over a long period of time subject to stipulations that the number of people below an absolute poverty line does not increase, and that the distribution of income does not become more unequal. In fact, economic development means a sustainable increase in the standard of living. Therefore, it refers not only to increase in per capita income but also the alleviation of poverty and reducing the gap between the rich and the poor. Moreover, it also incorporates other social issues such as, education, health as well as environmental protection.
In a nutshell, economic development is an increase in economic infrastructure i.e. physical infrastructure such as transportation, communication, irrigation, Bridge and Dam, Hydropower etc. and social infrastructure such as Drinking Water, Education, Healthcare, Human Rights, Democracy etc.Economic Development is measured by various methods, one very popular method of measurement is the Human Development Index (HDI) developed by UNDP, which takes into account of the literacy rates, life expectancy and Per Capita GDP.
High levels of GDP don’t indicate high levels of development. It is not aggregate GDP that is important, but GDP per capita. Countries like China and India have much higher levels of GDP than Singapore, New Zealand or Belgium, but are economically less developed. Hence, Economic Growth is a necessary but not sufficient condition of economic development.
Economic Development Vs Economic Growth
A country's general economic health can be measured by looking at that country's economic growth and development. Let's take a separate look at what indicators comprise economic growth versus economic development.
Basis

Economic Development

Economic Growth

Implications
Economic development implies   changes in income, savings and investment along with progressive changes in socio-economic structure of country (institutional and technological   changes).
Economic growth refers to an increase in the real output of goods and services in the country.
Factors
Development relates to growth of human capital indexes, a decrease in inequality figures, and structural changes that improve the general population's quality of life.
Growth relates to a gradual increase in one of the components of Gross Domestic Product: consumption, government spending, investment, net exports.
Measurement
Measurement of Development is Qualitative. HDI (Human Development Index), gender- related index (GDI), Human poverty index (HPI), infant mortality, literacy rate etc.
Measurement of Growth is Quantitative. Increases in real GDP.
Effect
Brings qualitative and quantitative changes in the economy
Brings quantitative changes in the economy
Relevance
Economic development is more relevant to measure progress and quality of life in developing nations.
Economic growth is a more relevant metric for progress in developed countries. But it's widely used in all countries because growth is a necessary condition for development.
Scope
Concerned with structural changes in the economy
Growth is concerned with increase in the economy's output
Labels:

Comments

Post a Comment

Popular posts from this blog

Market Economy Vs Command Economy

Generally, there are two fundamentally different ways of organizing an economy. Market and Command Economy. A market economy is one in which individuals and private firms make the major decisions about production and consumption. In a market economy, decisions are made in markets, where individuals and enterprises voluntarily agree to exchange goods and services, usually through payments of money. A system of prices, of markets, of profits and losses, of incentives and rewards determines the what (profits), the how (costs) and the form whom (reward for inputs). [Laissez-faire economy] A command economy is one in which the government makes all important decisions about production and distribution. In a command economy, the government owns most of the means of production; it also owns and directs the operations of enterprises in most industries; it is the employer of most workers and tells them how to do their jobs; and it decides how the output of the society is to be divided among ...
Post a Comment
Read more

Let's discuss the government budget

A government budget is a financial plan that outlines the revenues and expenditures of a government for a specific period. It is a crucial tool for managing a country's finances efficiently to achieve economic and social goals like promoting growth, reducing poverty, and providing public services. Monitoring and adjusting the budget as needed is essential for fiscal stability and sustainability.  In Nepal, the tradition of presenting an annual budget dates back to the 1950s, with the first budget presented in 1951 covering the period from March 1951 to February 1952. This change followed the overthrow of the Rana regime in February 1951. During this transitional phase without a legislature, the first budget was presented at the end of the year BS 2007 through Radio Nepal. The budget amount was Rs. 52,529,000, with a tax collection target of Rs. 30,619,000. The then Finance Minister, Subarna Shamsher, presented the budget as part of the council of ministers led by Prime Minister Mat...
Post a Comment
Read more

Economic Efficiency

A given economic arrangement is efficient if there can be no rearrangement which will leave someone better off without worsening the position of others. One important aspect of overall economic efficiency is productive efficiency. Productive efficiency occurs when an economy cannot produce more on one good without producing less of another good.
Post a Comment
Read more